Argentina is, and historically has been, a country with limited market openings, which was exasperated with the establishment of protectionist measures between 2000 and 2015. Since taking office in late 2015, the administration of President Mauricio Macri has rolled back some of these in an attempt to remove export duties and foreign exchange controls, for example. The government’s overarching National Productive Plan, which was launched in late 2016, as well its implementation of key reforms in the fields of taxation and labour are expected to have beneficial effects on the country’s business environment. However, while imports have recovered in the wake of these measures, exports have trailed behind, due to the fact that Argentine products remain relatively non-competitive. In 2017 the value of total annual exports excluding services was estimated at $58.4bn, an increase of 0.9% on the previous year, according to figures from the Argentine National Statistics and Censuses Institute (Instituto Nacional de Estadística y Censos, INDEC).
Reforms
A central reform was the removal in December 2015 of export taxes on certain goods, such as meat, wheat and maize, and a reduction on others, including soya. As a result, wheat exports rose from $1bn in 2015 to $1.84bn in 2016 – representing a 46% increase – and jumped by 23.3% to $2.4bn in 2017. The US Department of Agriculture forecasts wheat exports to register a record high in FY 2018/19 of 14.2m tonnes.
The government has implemented other reforms to not only facilitate export procedures and ease administrative hurdles, but also to improve the export competitiveness of key industries. To this end, in May 2017 the government launched its Exporta Simple, or Simple Export, platform which operates as a single window for trade, aimed at facilitating export procedures for small and medium-sized enterprises (SMEs). Through its own development bank, the Investment and External Trade Bank (Banco de Inversion y Comercio Exterior, BICE), the government has tried to stimulate exports of local SMEs by providing low interest loans for exporters. Between 2015 and 2017 the bank nearly tripled its export loans portfolio. “Access to short-term loans required for exports is not the largest obstacle for the development of trade,” Ricardo Bebczuk, research director at the BICE, told OBG. “Local firms, and especially SMEs, remain uncompetitive for a variety of reasons, including a burdensome taxation policy and a volatile real exchange rate. SMEs also require access to long term-financing to carry out investment plans.” The government has also moved ahead with the progressive lifting of tariff positions that fall under the World Trade Organisation’s non-automatic import licensing.
International Deals
As part of efforts to boost export performance, the government has sought to establish a range of deals with global partners. These have included the removal of roaming fees with Chile, set to be implemented in 2019, the opening up of the Chinese and Japanese markets for Argentine meat and prawns and talks on the extension of the Economic Complementation Agreement with Mexico, which is currently set to end in March 2019 and has allowed tariff-free access between the countries’ automotive sectors since March 2015. Argentina also concluded a tariff-free agreement with Colombia in May 2017 enabling the former to export up to 42,000 vehicles a year to its regional counterpart over a four-year period. In May 2018 Argentina signed a treaty with Brazil related to knowledge-based services, which will allow companies exporting goods in the segment between the two countries to avoid double taxation.
Trade prospects for Argentina as part of the Mercosur bloc are also positive, with Uruguay leading talks for a comprehensive cooperation agreement between China and several other Latin American and Carribbean countries, which should be signed in late 2018.
In February that year the Canadian government announced plans to open talks on a trade deal with a bloc of four Mercosur countries, including Argentina.
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